IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/halshs-01098762.html
   My bibliography  Save this paper

Agricultural marketing cooperatives with direct selling: A cooperative–non-cooperative game

Author

Listed:
  • Maxime Agbo

    (African School of Economics)

  • Damien Rousselière

    () (GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage)

  • Julien Salanié

    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

Abstract

We build a theoretical model to study a market structure of a marketing cooperative with direct selling, in which many farmers are members of an agricultural marketing cooperative. They can sell their production either to the cooperative or on an oligopolistic local market. We show that the decision to sell to the cooperative induces an anti-competitive effect on the direct selling market. The cooperative facilitates collusion on the local market by making farmers softer competitors on that market. Conversely, direct selling may create a "healthy emulation" among farmers, leading to more production benefiting the cooperative.

Suggested Citation

  • Maxime Agbo & Damien Rousselière & Julien Salanié, 2014. "Agricultural marketing cooperatives with direct selling: A cooperative–non-cooperative game," Working Papers halshs-01098762, HAL.
  • Handle: RePEc:hal:wpaper:halshs-01098762
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01098762
    as

    Download full text from publisher

    File URL: https://halshs.archives-ouvertes.fr/halshs-01098762/document
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hovelaque, Vincent & Duvaleix-Tréguer, Sabine & Cordier, Jean, 2009. "Effects of constrained supply and price contracts on agricultural cooperatives," European Journal of Operational Research, Elsevier, vol. 199(3), pages 769-780, December.
    2. Svend Albæk & Christian Schultz, 1997. "One Cow, One Vote?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(4), pages 597-615, December.
    3. Cheryl Brown & Stacy Miller, 2008. "The Impacts of Local Markets: A Review of Research on Farmers Markets and Community Supported Agriculture (CSA)," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(5), pages 1298-1302.
    4. Michael L. Cook & Fabio R. Chaddad, 2004. "Redesigning Cooperative Boundaries: The Emergence of New Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1249-1253.
    5. Metin Cakir & Joseph V. Balagtas, 2012. "Estimating Market Power of U.S. Dairy Cooperatives in the Fluid Milk Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(3), pages 647-658.
    6. Richard J. Sexton, 1986. "The Formation of Cooperatives: A Game-Theoretic Approach with Implications for Cooperative Finance, Decision Making, and Stability," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(2), pages 214-225.
    7. Peter Helmberger & Sidney Hoos, 1962. "Cooperative Enterprise and Organization Theory," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 44(2), pages 275-290.
    8. Stefano Pascucci & Cornelis Gardebroek & Liesbeth Dries, 2012. "Some like to join, others to deliver: an econometric analysis of farmers' relationships with agricultural co-operatives," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 39(1), pages 51-74, February.
    9. Konstantinos Giannakas & Murray Fulton, 2005. "Process Innovation Activity in a Mixed Oligopoly: The Role of Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(2), pages 406-422.
    10. Roy, Devesh & Thorat, Amit, 2008. "Success in High Value Horticultural Export Markets for the Small Farmers: The Case of Mahagrapes in India," World Development, Elsevier, vol. 36(10), pages 1874-1890, October.
    11. Bontems, Philippe & Fulton, Murray, 2009. "Organizational structure, redistribution and the endogeneity of cost: Cooperatives, investor-owned firms and the cost of procurement," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 322-343, October.
    12. Christophe Bravard & Pascal Billand & Subhadip Chakrabarti & Sudipta Sarangi, 2010. "Extending Networks of Collaboration to Multi-market Oligopolies," Post-Print halshs-00527543, HAL.
    13. Billand, Pascal & Bravard, Christophe & Chakrabarti, Subhadip & Sarangi, Sudipta, 2010. "Networks of Collaboration in Multi-market Oligopolies," MPRA Paper 28188, University Library of Munich, Germany.
    14. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    15. Suetens, Sigrid, 2008. "Does R&D cooperation facilitate price collusion? An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 822-836, June.
    16. Manmohan Agarwal & Alokesh Barua, 2004. "Entry liberalization and export performance: a theoretical analysis in a multi-market oligopoly model," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 13(3), pages 287-303.
    17. Sexton, Richard J. & Iskow, Julie, 1988. "Factors Critical to the Success or Failure of Emerging Agricultural Cooperatives," Information Series 11921, University of California, Davis, Giannini Foundation.
    18. Steven J. Holland & Robert P. King, 2004. "Trading Mechanisms for New-Generation Cooperative Stock: The Architecture of Organizational Formation and Demise," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1262-1268.
    19. Mujawamariya, Gaudiose & D’Haese, Marijke & Speelman, Stijn, 2013. "Exploring double side-selling in cooperatives, case study of four coffee cooperatives in Rwanda," Food Policy, Elsevier, vol. 39(C), pages 72-83.
    20. Berit Tennbakk, 1995. "Marketing Cooperatives In Mixed Duopolies," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 33-45, January.
    21. Rafat A. M. E. Soboh & Alfons Oude Lansink & Gerard Giesen & Gert van Dijk, 2009. "Performance Measurement of the Agricultural Marketing Cooperatives: The Gap between Theory and Practice," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(3), pages 446-469, September.
    22. Enrique Fatas & Francisca Jimenez-Jimenez & Antonio J. Morales, 2010. "Blind Fines in Cooperatives," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(4), pages 564-587.
    23. Uematsu, Hiroki & Mishra, Ashok K., 2011. "Use of Direct Marketing Strategies by Farmers and Their Impact on Farm Business Income," Agricultural and Resource Economics Review, Cambridge University Press, vol. 40(01), pages 1-19, April.
    24. Robert T. Deacon, 2012. "Fishery Management by Harvester Cooperatives," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 6(2), pages 258-277, July.
    25. Fischer, Elisabeth & Qaim, Matin, 2012. "Linking Smallholders to Markets: Determinants and Impacts of Farmer Collective Action in Kenya," World Development, Elsevier, vol. 40(6), pages 1255-1268.
    26. Magrini, Marie-Benoît & Fares, M’hand & Filippi, Maryline, 2012. "La signalisation de la qualité chez les petites coopératives agricoles françaises," Revue d'économie régionale et urbaine, Editions NecPlus, vol. 2011(04), pages 705-733, May.
    27. Ortmann, Gerald F. & King, Robert P., 2007. "Agricultural Cooperatives I: History, Theory and Problems," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(1), pages 1-29, March.
    28. Hoffmann Ruben, 2005. "Ownership Structure and Endogenous Quality Choice: Cooperatives versus Investor-Owned Firms," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(2), pages 1-26, December.
    29. Low, Sarah A. & Vogel, Stephen J., 2011. "Direct and Intermediated Marketing of Local Foods in the United States," Economic Research Report 118025, United States Department of Agriculture, Economic Research Service.
    30. Briscoe, Robert & Ward, Michael, 2006. "In Small Both Beautiful and Competitive? A Case Study of Irish Dairy Cooperatives," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 34(2), pages 1-20.
    31. Kostas Karantininis & Angelo Zago, 2001. "Endogenous Membership in Mixed Duopsonies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1266-1272.
    32. Albaek, Svend & Schultz, Christian, 1998. "On the relative advantage of cooperatives," Economics Letters, Elsevier, vol. 59(3), pages 397-401, June.
    33. Jos Bijman & George Hendrikse & Aswin Oijen, 2013. "Accommodating Two Worlds in One Organisation: Changing Board Models in Agricultural Cooperatives," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 34(3-5), pages 204-217, April.
    34. Markelova, Helen & Meinzen-Dick, Ruth & Hellin, Jon & Dohrn, Stephan, 2009. "Collective action for smallholder market access," Food Policy, Elsevier, vol. 34(1), pages 1-7, February.
    35. Timothy L. Sorenson, 2007. "Credible collusion in multimarket oligopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 115-128.
    36. Bond, Jennifer Keeling, 2006. "Cooperative Growth and Decline: A Game Theoretic Approach to Understanding Members' Allocation Choices," 2006 Annual meeting, July 23-26, Long Beach, CA 21279, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    37. G.E. Boyle, 2004. "The economic efficiency of Irish dairy marketing co-operatives," Agribusiness, John Wiley & Sons, Ltd., vol. 20(2), pages 143-153.
    38. George W. Ladd, 1974. "A Model of a Bargaining Cooperative," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(3), pages 509-519.
    39. George Hendrikse & Jos Bijman, 2002. "On the emergence of new growers' associations: self-selection versus countervailing power," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(2), pages 255-269, June.
    40. Weisman, Dennis L., 2003. "A generalized pricing rule for multi-market Cournot oligopoly," Economics Letters, Elsevier, vol. 81(1), pages 95-99, October.
    41. Hand, Michael S. & Martinez, Stephen W., 2010. "Just What Does Local Mean?," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 25(1), pages 1-4.
    42. Royer, Jeffrey S. & Matthey, Holger, 1999. "Optimal Strategies Of Marketing Cooperatives Regarding Nonmember Business," 1999 Annual meeting, August 8-11, Nashville, TN 21710, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    43. Richard J. Sexton, 1990. "Imperfect Competition in Agricultural Markets and the Role of Cooperatives: A Spatial Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 709-720.
    44. Holloway, Garth & Nicholson, Charles & Delgado, Chris & Staal, Steve & Ehui, Simeon, 2000. "Agroindustrialization through institutional innovation: Transaction costs, cooperatives and milk-market development in the east-African highlands," Agricultural Economics, Blackwell, vol. 23(3), pages 279-288, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Musson, Anne & Rousselière, Damien, 2018. "Exploring the effect of crisis on cooperatives: A Bayesian performance analysis of French craftsmen cooperatives," Working Papers 279350, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    2. François Bareille & Florence Bonnet-Beaugrand & Sabine Duvaleix-Tréguer, 2017. "Objectives’ alignment between members and agricultural cooperatives," Review of Agricultural, Food and Environmental Studies, Springer, vol. 98(1), pages 75-91, July.
    3. Rousselière, Damien, 2017. "A flexible approach to age dependence in organizational mortality. Comparing the life duration of cooperative and non-cooperative enterprises using a Bayesian Generalized Additive Discrete Time Surviv," Working Papers 264214, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    4. Rousselière, Samira & Rousselière, Damien & Ramani, Shyama, 2016. "Innovation Led Alliances: Theory and application to the GM Plant Industry," 149th Seminar, October 27-28, 2016, Rennes, France 244949, European Association of Agricultural Economists.
    5. Smaïl Amghrous & Damien Rousselière, 2019. "L’implication des agriculteurs dans les coopératives dans un pays en transition vers une économie de marché : Une application aux coopératives agricoles de services algériennes," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(4), pages 724-749, September.
    6. repec:taf:raaexx:v:24:y:2017:i:3-4:p:464-484 is not listed on IDEAS
    7. Noriaki Matsushima, 2017. "Expanding distribution channels," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 24(3-4), pages 464-484, October.

    More about this item

    Keywords

    marketing cooperative; local market; direct selling; competition;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-01098762. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.